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When to Keep a Property Available Off-Market

As we start a new year, property owners across the country are faced with uncertainty. The pandemic is continuing to disrupt business operations; passed and proposed legislative changes are creating shifts in investors’ portfolios; CRE trends are fluctuating drastically compared to years prior.

With so many worries presented, many investors are now questioning the best way to market their commercial real estate. Should they continue with a marketing campaign, given the low supply and high demand? Or should they pull their property from the market and wait for the chaos to cool down?

Well, there is an in-between that may benefit investors more now than ever: Selling their property off-market!

Why Selling Off-Market May Be the Best Option

Many investors are wary of selling their property off-market because off-market assets often indicate to buyers that the seller lacks motivation, causing prospective buyers to either pass on the deal or offer a below-market value.

However, not all sellers should adopt this mindset. There are numerous occasions that sellers have found that utilizing an off-market platform (especially during these times!) proved to be the most optimal choice to boast their position. Let’s take a look at four reasons off-market may be your best option this year:

1. During Renovations

If you are currently doing renovations on a property you intend to sell, you will want to wait until construction is fully complete before taking the property to market.

Buyers do not always have that same vision as you, and when they see the unfinished product, they could be turned off by the project, which could be damaging to your plans.

However, during this phase, soliciting your property off-market to a select few buyers could be useful. By introducing the asset only to qualified buyers, you may receive feedback and insight on the deal that you would otherwise have missed. They may have a vision that you overlooked.

Think about Apple. Apple doesn’t sell the newest iPhone until it is ready to be presented to the consumer. The company understands that consumers want immediate satisfaction, and presenting a product too soon could deter their interest.

2. To Get Investor Feedback

Often, investors will conduct an off-market property campaign to receive feedback from the investor community. Here are some tips on when this could be beneficial:

  • Conduct an off-market campaign for roughly 40 days before launching a full-blown marketing campaign. The most active buyers typically do not purchase on-market deals – They are always looking for motivated sellers off-market. They will respect the opportunity and provide honest feedback on the deal. Once you have exhausted your local options, you are set to go public.
  • If you have an asset but are unsure where it will deliver, an off-market campaign provides insight from the investor community. Through discussions and offers, you and your agent can gain a deeper understanding of where the property will trade. This will increase your probability of selling the asset once you go to market.

3. Limited Buyer Pool – Property in Early Stages of Development

If you are currently developing a property, you will want to wait until it is in a deliverable state before launching your marketing campaign.

By taking a property to market too soon, property owners can potentially extend their timeline and face financial loss. For example, tenants who try to land a deal pre-development are typically not qualified to complete the project, and their involvement can slow down the process. As an uneducated buyer, they often attempt to see the deal through. But after months of being in the process, they experience deal fatigue and eventually back out. As the property owner, you will have wasted months trying to put this buyer in the deal!

The reality is that only a few experienced buyers could pursue an acquisition at this stage. And for those that are experienced enough to do so, they can pursue the acquisition in the current stage of development – there would be no need to extend the timeline or wait for the entitlement process to be complete.

Therefore, during development, vet prospective buyers who are savvy on development projects. You won’t need to waste time conducting a full marketing campaign. The key here is to only engage with buyers who are ready to transact immediately.

4. Wrong Timing in Market

Bringing your property to the market at the wrong time can reduce your chances of selling at your asking price. As a property owner, timing is everything, and you want to take the property to market during a time in which you can create a bidding frenzy among the buyer community.

If you take the asset to market at the wrong time, and the deal sits for an extended period, buyers tend to lose interest! Today, this is what many property owners face. Uncertainty related to COVID has created an unpredictable market.

During these times, an off-market campaign may be your best option. Once you have identified your asking price, you can vet the deal out. There may be someone willing to meet your price, and in this case, you can avoid the entire marketing process.

How to Market Your Property Off-Market

Marketing a property off-market may seem like a challenge due to the inability to leverage online listing services. Many individuals think that off-market deals are only vetted via phone calls, which can be timely and propose financial loss. However, through our years of experience working with investors, Topside has identified an effective way to conduct these marketing campaigns: Drip-marketing.

Simply stated, drip campaigns are a series of emails sent out on a schedule to a specific set of clients. The goal of these campaigns is to entice prospective buyers to reach out for more information.

Through the last few months, even during government shutdowns, we have successfully closed on multiple deals, putting buyers and sellers into off-market deals. Our effective campaigns, paired with our industry relationships, have placed us in a position to help our clients in such unprecedented times.

If you are looking for a qualified representative to help you sell your property, on- or off-market, contact us to discuss how we may be able to help you.

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